Roughly, the Lifetime Value of a customer is the projected revenue that a customer will generate during their lifetime. Some companies don’t believe in figuring out the Lifetime Value of their customers because it takes too much time. It’s incredibly important though, as shown in the infographic below (See the entire Infographic by KISSmetrics here).
I was talking to my Grandma the other day and she was saying their internet/cable service price was being raised a ridiculous amount and how upset she was by it. She then proceeded to explain to me how she â€œhandlesâ€ those situations. She lets them know she’s ready to walk and join another company. Yes, it’s a large company and they could find another customer, but another customer who will be with them and give them as much business as my grandparents have? They will easily lose money if they have to find another customer to replace my grandparents’ business. Luckily, the company is smart and understands this.
Yes, you can probably replace a customer and it won’t be a big deal (especially if you’re a large company), but why not provide great service, keep your customer longer and not have to go through the struggle of finding another customer to replace them? Find new customers to grow your business.
I’m not trying to tell you what to do specifically, but just be smart. Is it really worth losing 10 more years with a customer to raise their price if they’re going to walk? Find out what their Lifetime Value is and work it into your customer service plan.